The Income-Tax department, Pune, has challenged the Pune Municipal Corporations move of levying service charges in lieu of property tax from the Union governments offices in the city, stating that it was violation of Article 285 (1) of the Constitution.
According to a press release issued by the chief commissioner of income-tax, Pune, the properties owned by the Union government are not subject to tax as per Article 285 of the Constitution of India.
The service charges demanded in lieu of property taxes by the PMC are not in accordance with the privileges granted by the Constitution, the statement reads. It further states that, in another case, the Supreme Court has held that the interplay of the constitutional and legal provisions being well defined, it is clearly not within the competence of the corporation to impose tax on the Union of India, the same being violative of the Constitution.
When contacted, Vilas Kanade, head of tax assessment and collection department, PMC, said that the charges were being collected as per a government regulation (GR) of the Government of India.
Since this issue was brought before us, we held meetings and have written to officials of the department who have issued the GR and of the income-tax department, Pune. Currently, we collect fire cess, sanitation charges and general taxes. However, since the constitutional provision was brought to our notice, we issued letters seeking explanation, Kanade said. Although the letters were sent three months ago, the PMC has received no reply so far, they added.